Learning to love government? Technological change and the political economy of higher education

Abstract

Why do voters have divergent beliefs about the role of government in solving social problems? We study this question in the context of skill-biased technological change and investment in higher education. We document that the negative income consequences of technological change are, descriptively, mitigated in US counties with greater levels of higher education investment. We show that exposure to these conditions of greater investment is, in turn, correlated with more public support for higher education spending. We conclude that higher education investments are productive. However, we also find evidence consistent with the idea that whether people in a community learn the benefits of higher education spending depends on what they believed to begin with. Learning is history dependent. In a context where higher education spending dampens the negative employment effects of technological change, a history of believing that education is productive may advantage local communities in learning the true productivity of higher education investments.